There is no dispute that more than Rs.80 lacs are due and payable by the defendant to the plaintiff. There is also no dispute whatsoever that this amount was acknowledged to be due and payable by them to the plaintiff on more than one occasion. Furthermore, cheques were drawn, more than once to make payment of the said sum but they were dishonoured for insufficiency of funds. Therefore, the case is that the defendant not only acknowledged their debt but drew a negotiable instrument or instruments observing all formalities to make payment of that sum. Thereby, they represented to the plaintiff that they were making payment of the sum outstanding by tendering the cheque or cheques.
But the defendant also knew and the plaintiff did not know that they did not have sufficient funds in their bank account so that these cheques could be honoured.
The provisions of the law have not only to be read literally but should also be interpreted liberally and purposively so as to include situations, which may not be literally covered by the words of the statute.
By bringing about this kind of a situation the defendant immediately tended to evince, in the eyes of the court, the necessary 'intent' to obstruct and delay the execution of the decree. This is so because after having received the cheque or cheques the plaintiff for a temporary period did not take any step to institute the suit where a decree was most likely to be passed on the above facts.
When the defendant indulged in this kind of act of issuing cheques, dishonoured subsequently, it is not unlikely that the court should form an impression, as I do in this case, that the defendant is also likely to dispose of or secret their properties so as to render realisation of the decree to be passed against them infructuous.
In this case, not only the plaintiff has a strong prima facie case but the plaintiff has the strongest possible prima facie case that can be established in an affidavit. Since the plaintiff is able to establish the strongest prima facie case possible, admission thereof by the defendant, followed by their issuance of cheques, dishonoured for insufficiency of funds, the ingredients of Order XXXVIII Rule 5 are, in my opinion , satisfied. Hence, the plaintiff is entitled to an order of attachment securing their claim.
Furthermore, a party who represents to another to make payment by cheque which is dishonoured, should be estopped from using that amount from any account. Equity prevents him from doing this, justifying an order of attachment.
Calcutta High Court
Amrapali Barter [Pvt.] Ltd vs Elder Pharmaceuticals Ltd on 5 June, 2014
Citation;AIR 2014(NOC) 607 Cal
The Court : This is an application claiming judgment on admission and attachment before judgment.
The claim of the plaintiff is founded on monies lent and advanced by them to the defendant. Such advance was made in or about June, 2012.
The case of the plaintiff put simply is this. After giving credit to monies repaid by the defendant to them the plaintiff has a principal claim of Rs.80 lacs against them.
By their letter dated 15th July, 2013 the defendant made payment of a sum of Rs.20 lacs to the plaintiff and acknowledged that Rs.80 lacs were owing by them to the plaintiff as principal sum. Such acknowledgement was reiterated by their letter dated 8th October, 2013. With that letter cheques aggregating to Rs.80 lacs were enclosed.
I do not know what happened to these cheques. Whether they were returned by the plaintiff to the defendant or whether payment on them was stopped by the defendant is unknown, as there is no document on record with regard to the same. However, on 29th October, 2013 these cheques were replaced by another set of cheques for the same amount. These cheques were held up to February, 2014 by the plaintiff for reasons not appearing in the records. In February, 2014 these cheques were presented for encashment and dishonoured on the ground of insufficiency of funds of the defendant with the bank. On 28th February, 2014 fresh cheques for Rs.80 lacs were issued by the defendant, only to be dishonoured again.
On this prima facie case the plaintiff obtained an ex parte interim order on 6th May, 2014 in terms of prayer [d] of the Notice of Motion. Prayer [d] of the Notice of Motion is as follows :
"[d] An order of injunction be passed restraining the respondent from dealing with and/or disposing of and/or alienating and/or transferring and/or encumbering its assets and properties including its branded formulations business and from withdrawing any amount from any of its bank accounts and particularly those mentioned in annexure "L" without keeping apart a sum of Rs.86,73,096/-."
Mr. Abhrajit Mitra, learned senior advocate appearing for the plaintiff tries to support the ex parte interim order of 6th May, 2014 by narration of the above case and by citing certain judgments, which I will discuss later on.
He also brings to my notice a website publication dated 13th December, 2013 of the defendant, a hard copy of which is annexed to the petition as annexure "M" at page 75 to the effect that the defendant was trying to sell its business to Torrent Pharmaceuticals Ltd. for over Rs.2000 crores. This transfer of business included transfer of properties of the defendant company for which reason the order of attachment should be sustained, according to Mr. Mitra.
Today, the defendant is represented by Mr. Surojit Nath Mitra, learned senior advocate.
At the outset, Mr. S.N. Mitra points out the delay of the plaintiff in taking action.
He says that the website publication was made on 13th December, 2013. The notice under Sections 138 and 141 of the Negotiable Instruments Act, 1881 as well as asking for payment of the above amount was issued by the advocate on record for the plaintiff to the defendant on 19th March, 2014. This application was affirmed on 25th April, 2014 and filed in the registry of this court on 28th April, 2014. For this inordinate delay on the part of the plaintiff, according to Mr. S. N.Mitra, this court ought not to have passed any interim order.
The law in our country is that the defendant cannot in normal circumstances be asked to secure the claim of the plaintiff. The plaintiff has to obtain a decree and put the same into execution to realise it. An exception is made, as provided in Order XXXVIII Rule 5 of the Code of Civil Procedure. The plaintiff has first to establish a good prima facie case. Together with that he has to show that the defendant has formed an intention "to obstruct or delay the execution of any decree that may be passed against him" [see Order XXXVIII Rule 5]. Furthermore, he is "about to dispose of his properties or about to remove the same from the limits of the court". Both these conditions have to be satisfied as laid down by the Hon'ble Supreme Court in Raman Tech. & Process Engg. Co. & Anr. Vs. Solanki Traders; reported in [2008] 2 SCC 302 and Rajendran & Ors. vs. Shankar Sundaram & Ors.; reported in AIR 2008 SC 1170, the former of which was cited by Mr. S.N.Mitra and the latter cited by Mr. A. Mitra.
I do not treat the dictum in Rajendran & Ors. vs. Shankar Sundaram & Ors.; reported in AIR 2008 SC 1170 as the plaintiff having to establish a prima facie case on merits only. It includes, in my opinion, a prima facie establishment of the fact that the defendant is about to dispose of or remove his properties, as mentioned in Order XXXVIII Rule 5.
These principles were also followed by a Division Bench of this court in the case of Sunil Kakrania & Ors. vs. M/s. Saltee Infrastructure Ltd. & Anr.; reported in AIR 2009 Cal 260 cited by Mr. S. N. Mitra. On the authorities cited by him Mr. S. N. Mitra submitted that the plaintiff had failed to establish the tests mentioned in Order XXXVIII Rule 5.
Now, take the present case.
There is no dispute that more than Rs.80 lacs are due and payable by the defendant to the plaintiff. There is also no dispute whatsoever that this amount was acknowledged to be due and payable by them to the plaintiff on more than one occasion. Furthermore, cheques were drawn, more than once to make payment of the said sum but they were dishonoured for insufficiency of funds. Therefore, the case is that the defendant not only acknowledged their debt but drew a negotiable instrument or instruments observing all formalities to make payment of that sum. Thereby, they represented to the plaintiff that they were making payment of the sum outstanding by tendering the cheque or cheques.
But the defendant also knew and the plaintiff did not know that they did not have sufficient funds in their bank account so that these cheques could be honoured.
The provisions of the law have not only to be read literally but should also be interpreted liberally and purposively so as to include situations, which may not be literally covered by the words of the statute.
By bringing about this kind of a situation the defendant immediately tended to evince, in the eyes of the court, the necessary 'intent' to obstruct and delay the execution of the decree. This is so because after having received the cheque or cheques the plaintiff for a temporary period did not take any step to institute the suit where a decree was most likely to be passed on the above facts.
When the defendant indulged in this kind of act of issuing cheques, dishonoured subsequently, it is not unlikely that the court should form an impression, as I do in this case, that the defendant is also likely to dispose of or secret their properties so as to render realisatiokn of the decree to be passed against them infructuous.
In this case, not only the plaintiff has a strong prima facie case but the plaintiff has the strongest possible prima facie case that can be established in an affidavit. Since the plaintiff is able to establish the strongest prima facie case possible, admission thereof by the defendant, followed by their issuance of cheques, dishonoured for insufficiency of funds, the ingredients of Order XXXVIII Rule 5 are, in my opinion , satisfied. Hence, the plaintiff is entitled to an order of attachment securing their claim.
Furthermore, a party who represents to another to make payment by cheque which is dishonoured, should be estopped from using that amount from any account. Equity prevents him from doing this, justifying an order of attachment.
Since the plaintiff has made substantial delay in approaching the court I am inclined to give the defendant some time to furnish security to secure the claim of the plaintiff.
I direct the defendant to secure the above principal claim of the plaintiff by furnishing cash security or a bank guarantee to be kept renewed by them with the Registrar, Original Side of the above amount of Rs.80 lacs by 15th July, 2014.
The existing interim order will continue, subject to what is stated below. However, the existing interim order would continue with regard to the bank accounts of the defendant only, upon their furnishing a bank statement before this court enclosed with an affidavit by 13th June, 2014 that a sum in excess of Rs.86,73,096/- is available in their bank account. In that event, the existing injunction restraining them from dealing with or disposing of their properties and business would stand automatically vacated.
Upon furnishing the cash security or bank guarantee with the Registrar, Original Side, all orders of injunction will stand vacated.
The Registrar, Original Side will invest the cash, if so furnished, in a short term fixed deposit with the State Bank of India, Calcutta High Court Special branch, Kolkata and keep the same renewed until further orders of this order.
Let affidavits be filed according to the following directions: Let affidavit in opposition be filed by 30th June, 2014. List this application on 21st July, 2014. Affidavit in reply, if any, may be filed in the mean time.
Certified photocopy of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.
(I. P. MUKERJI, J.) Pkd. A.R.[C.R.]
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